HARRIS TRANSPORT COMPANY v. ROBERT HOLLIS and WILSON TRANSPORTATION SERVICES, INC.
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RENDERED:
SEPTEMBER 8, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1999-CA-001886-MR
HARRIS TRANSPORT COMPANY
and GULF INSURANCE COMPANY
APPELLANTS
APPEAL FROM MADISON CIRCUIT COURT
HONORABLE WILLIAM JENNINGS, JUDGE
ACTION NO. 98-CI-00589
v.
ROBERT HOLLIS and
WILSON TRANSPORTATION SERVICES, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
DYCHE, EMBERTON and HUDDLESTON, Judges.
HUDDLESTON, Judge:
Harris Transport Company and Gulf Insurance
Company appeal from a Madison Circuit Court judgment enforcing a
Workers’ Compensation Board award to Robert W. Hollis.
Hollis
was
employed
Transportation Services, Inc.1
as
a
truck
driver
for
Wilson
Wilson Transportation, which owned
at least four semi-tractor trailer trucks, but had no Interstate
1
Wilson Transportation was a defendant in the proceedings
below and is named as an appellee in this appeal.
Commerce Commission operating authority, permanently leased its
equipment and drivers to Harris Transport.
On July 19, 1993, Hollis injured his back when he slipped
and fell against a stack of pallets following a delivery to the
Rand-McNally facility in Richmond, Kentucky. Hollis was eventually
diagnosed
with
procedures.
a
herniated
disc
and
underwent
two
surgical
Thereafter, Hollis filed a workers’ compensation
claim. Hollis’s immediate employer, Wilson Transportation, did not
have workers’ compensation coverage.
Harris Transport, likewise,
did not have workers’ compensation coverage applicable to Hollis.
However, Harris Transport did have a liability policy with Gulf
Insurance which covered any liability it incurred as a result of
the accident.2
The controversy in this case stems from an occupation
accident insurance policy maintained on Hollis through Fidelity
Security Life Insurance Company. It is unclear from the record who
paid the premiums on the policy;3 however, it is undisputed that
the policy was not a workers’ compensation policy.
It is also
undisputed that, pursuant to the policy, Fidelity Security paid to,
or on behalf of, Hollis $52,590.15 in medical expenses incurred by
2
Apparently, the policy also covered Wilson Transportation.
The February 28, 1997, Administrative Law Judge’s order includes
the statement: “Also stipulated was insurance coverage by Gulf
Insurance Company for the liability of Harris [Transport] and/or
[Wilson Transportation] for an award of benefits to the extent of
its coverage limits.”
3
In his June 25, 1998, complaint, Hollis states that “the
premiums . . . were paid by the Plaintiff and not his employer.”
However, in his February 25, 1999, affidavit, Hollis stated,
“Premiums for the Occupational Accident Insurance Policy were paid
by my employer which would have been either by Wilson
Transportation and/or Harris Transport Company.”
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Hollis as a result of the accident.
The payments from Fidelity
Security were made to Hollis prior to the workers’ compensation
award at issue herein.
In
his
circuit
court
complaint,
Hollis
presented
uncontradicted evidence that Fidelity Security has advised him that
it intends to file a lien asserting an interest against his
workers’ compensation benefits for all sums paid by Fidelity
Security which should have been paid by workers’ compensation, and,
moreover, that it intends to enforce all of its rights, including
the right to bring suit against Hollis, to seek recovery on the
lien interest. The unrefuted circuit court evidence is that Hollis
intends to use any recovery in the present case to settle the
Fidelity Security claim.
On May 31, 1996, the ALJ entered an opinion and order
finding that although Wilson Transportation was an employer liable
for any benefits due to Hollis, because Wilson Transportation had
failed to secure workers’ compensation insurance coverage, Harris
Transportation
had
up-the-ladder
contractor
Kentucky Revised Statutes (KRS) 342.610(2).4
4
liability
under
The order was not
Ky. Rev. Stat. (KRS) 342.610 provides that:
A contractor who subcontracts all or any part of a contract
and his carrier shall be liable for the payment of
compensation to the employees of the subcontractor unless the
subcontractor primarily liable for the payment of such
compensation has secured the payment of compensation as
provided for in this chapter. Any contractor or his carrier
who shall become liable for such compensation may recover the
amount of such compensation paid and necessary expenses from
the subcontractor primarily liable therefor.
A person who
contracts with another:
(a)
To
have
work
performed
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consisting
of
the removal,
(continued...)
appealed pursuant to KRS 342.285.
On February 28, 1997, the ALJ
entered an order awarding Hollis workers’ compensation disability
and medical benefits.
This order was likewise not appealed.
The
February 28 order included the provision that:
The
Plaintiff
shall
further
recover
of
[sic]
the
defendant-employer and/or its insurance carrier, for the
cure and relief from the effects of the injury such
medical,
surgical
and
hospital
treatment,
including
nursing, medical and surgical supplies and appliances, as
may reasonably be required at the time of the injury and
thereafter during the disability.
It is uncontested that the amounts ordered to be paid in
this paragraph overlap with, and duplicate, amounts previously paid
to, or on behalf of, Hollis under the Fidelity Security policy.
Neither Harris Transport, Gulf Insurance, nor Wilson
Transportation
paid
the
medical
expenses
as
mandated
by
the
February 28, 1997, order, and on June 25, 1998, Hollis filed a
complaint in Madison Circuit Court pursuant to KRS 342.305 seeking
to enforce the medical payment provision of the February 28, 1997,
order.
The complaint alleged that defendants Harris Transport,
4
(...continued)
excavation, or drilling of soil, rock, or mineral, or the
cutting or removal of timber from land; or
(b) To have work performed of a kind which is a regular or
recurrent part of the work of the trade, business, occupation,
or profession of such person
shall for the purposes of this section be deemed a contractor,
and such other person a subcontractor. This subsection shall
not apply to the owner or lessee of land principally used for
agriculture.
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Gulf Insurance and Wilson Transportation had failed and refused to
pay Hollis any portion of the $52,590.15 in medical expenses
previously paid under the Fidelity Security policy.
On July 16,
1999, the trial court granted Hollis judgment against Harris
Transport and Gulf Insurance.5
This appeal followed.
First, the appellants argue that KRS 342.700(2) prohibits
an employee from making a double recovery for workers’ compensation
benefits and medical payments from an up-the-ladder contractor.
The appellants allege that since Hollis recovered $52,590.15 in
medical payments under the Fidelity Security policy, any workers’
compensation payments for the same services compensated under the
Fidelity
Security
policy
would
amount
to
the
type
of
double
recovery prohibited under KRS 342.700(2).
Paragraph 13 of the ALJ’s May 31, 1996, order bases
Harris Transport’s liability upon up-the-ladder liability under KRS
342.610(2).
because
Harris Transport was liable under this provision only
Wilson
Transportation
compensation insurance.
had
failed
to
procure
workers’
KRS 342.700(2), on the other hand, may
impose liability upon a contractor regardless of whether the
primary
employer
has
workers’
provisions of the statute are met.
compensation
coverage
if
the
The statute provides that:
A principal contractor, intermediate, or subcontractor
shall be liable for compensation to any employee injured
while in the employ of any one (1) of his intermediate or
subcontractors and engaged upon the subject matter of the
5
It is unclear why judgment was not granted against Wilson
Transportation.
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contract, to the same extent as the immediate employer.
Any principal, intermediate, or subcontractor who pays
the compensation may recover the amount paid from any
subordinate contractor through whom he has been rendered
liable under this section.
Every claim to compensation
under this subsection shall in the first instance be
presented
to
and
instituted
against
the
immediate
employer, but the proceedings shall not constitute a
waiver of the employee’s rights to recover compensation
under this chapter from the principal or intermediate
contractor nor shall the claim be barred by limitations,
if
the
claim
is
filed
against
the
principal
or
intermediate contractor within one (1) year after a final
unappealed order has been rendered by an arbitrator or
administrative
law
judge
determining
that
immediate
employer has insufficient security to pay the full and
maximum benefits that could be determined to be due him
under this chapter.
The collection of full compensation
from one employer shall bar recovery by the employee
against any other.
But he shall not collect from all a
total compensation in excess of the amount for which his
immediate employer is liable.
This subsection shall
apply only in cases where the injury occurred on, in, or
about the premises on which the principal contractor has
undertaken to execute work or which are under his control
otherwise or management.
-6-
Harris Transport’s liability is not based upon this
statute and no mention is made in the ALJ’s May 31, 1996, order of
KRS 342.700.
The statute limits its application to those “cases
where the injury occurred on, in, or about the premises on which
the principal contractor has undertaken to execute work or which
are under his control otherwise or management.”
It was not
determined in the proceedings below that Harris Transport could be
found liable under this provision.
By its terms, the statute does
not have a general application to all instances of contractor
liability.
Harris Transport did not appeal the May 31, 1996,
order, and we are bound by the ALJ’s finding that its liability is
based upon KRS 342.610. Absent a determination that KRS 342.700(2)
is applicable to the facts of this case, we discern no basis for us
to apply the double recovery provision of KRS 342.700(2) in our
review of this case. If Harris Transport interprets KRS 342.700(2)
such that its double recovery provisions apply to the facts of this
case, it should have raised the issue with the ALJ and/or appealed
her order so as to challenge the award insofar as it required
payment of medical expenses previously paid by Fidelity Security.
Next,
the
appellants
argue
the
provisions
of
KRS
342.610(2) only require a contractor to make payments to the extent
that the employer had not secured for payment of compensation as
required by KRS Chapter 342. KRS 342.610(2) provides, in pertinent
part, that:
A contractor who subcontracts all or any part of a
contract and his carrier shall be liable for the payment
of compensation to the employees of the subcontractor
-7-
unless the subcontractor primarily liable for the payment
of
such
compensation
has
secured
the
payment
of
compensation as provided for in this chapter.
As we understand the appellants’ position, they contend that the
Fidelity
Security
payments
made
to,
or
on
behalf
of,
Hollis
constitute “compensation as provided for in [Chapter 342].”
The proceedings before the ALJ resolved this issue.
The
ALJ determined that Wilson Transportation did not, at the time of
Hollis’ injury, have workers’ compensation coverage as defined in
KRS Chapter 342. It was further decided that the Fidelity Security
policy
was
not
coverage
as
defined
in
KRS
Chapter
342.
Accordingly, KRS 342.610(2) is not applicable to the facts of this
case.
Next, the appellants contend that under the provisions of
KRS 342.700(2), Hollis must first claim compensation and institute
an action against his immediate employer, Wilson Transportation,
before an action can be maintained against the appellants. For the
same reasons that we identified in the appellants’ first argument,
which likewise referenced KRS 342.700(2), the appellants’ liability
was not based upon this statute, but, rather, was based upon KRS
342.610(2).
KRS
342.700(2)
does
not
apply
to
liability
determinations other than to determinations under KRS 342.700(2).
Next,
the
appellants
claim
that
pursuant
to
KRS
342.020(1), Hollis has no statutory right to directly collect
medical expenses or benefits from an employer or an employer’s
workers’ compensation carrier.
The February 28, 1997, ALJ order
specifically provided for an award for medical expenses.
-8-
KRS
342.020(1) provides that “[t]he employer, insurer, or payment
obligor acting on behalf of the employer, shall make all payments
for services rendered to an employee directly to the provider of
the services within thirty (30) days of receipt of a statement for
services.”6
However, in this case, the medical expenses have
already been paid under the Fidelity Security policy.
The statute
clearly contemplates the situation of contemporaneous payment of
current billings and clearly was not intended to excuse liability
of the employer when, because of contested workers’ compensation
proceedings, the employee himself, or a collateral source on the
employee’s behalf, timely paid billings for medical services.
The
medical care suppliers have been paid and the February 28, 1997,
order provides for an award of medical expenses to Hollis.
It
follows that Hollis is entitled to receive direct payments of the
medical benefits from the appellants. Thereafter, according to the
uncontested Circuit Court proceedings, Hollis will settle the claim
of Fidelity Security for its payments of the medical supplier
billings.
The judgment is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE
ROBERT W. HOLLIS:
G. Phil Williams
WILLIAMS, WAGONER & NEVITT
Louisville, Kentucky
A. Andrew Draut
WEBER & ROSE, P.S.C.
Louisville, Kentucky
6
Emphasis supplied.
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